In its third quarterly report of 2011, the UCLA Anderson Forecast’s outlook for the nation was “far worse” than it was in its June forecast while San Diego is expected to "grind along" with slightly positive job growth.
Considering the weak, revised data for the first half of the year, the forecast called for average gross domestic product growth of just 0.9 percent on average for the five quarters, ending in the first quarter of 2012.
In California, the UCLA Anderson Forecast saw a tale of two states, as Coastal California enjoys a recovery rooted in exports, innovation and knowledge communities while Inland California continues to suffer from a glut of housing and a contraction in government spending.
University of San Diego economists Ryan Ratcliff and Alan Gin authored the San Diego report. In a report titled “Outlook for the San Diego County Economy, 2011-13,” they wrote, “Though negative risks to the forecast have increased, we predict that the local (San Diego) economy will continue to grind along with slightly positive job growth for the next three to four quarters, mirroring the softening forecasted for the nation and state.
"Unfortunately, this job growth will just barely keep up with the growth of the labor force, both from new entrants as well as the return of discouraged workers: Our forecast has unemployment holding steady around 10 percent over this period. The second half of 2012 sees some improvement, with payroll job growth accelerating to 2-2.5 percent in 2013 and unemployment coming down to 8.5 percent by the end of the forecast.”
Ratcliff and Gin assert that jobs are the “major story” for the San Diego housing market. They expect to see some weakening in home prices as the weak jobs outlook keeps buyers out of the market, thus reducing the region’s ability to absorb distress sales.
The San Diego Outlook forecasts that median home prices in San Diego “will move mostly sideways” and decline another 4 percent before bottoming late next year. As the local economy improves overall, buyers will enter the housing market and volumes in non-distressed homes will also pick up. By the end of 2012, the uptick in the market will bring prices back to or even slightly above today’s values.